Chapter 2
Summary

he People's Republic of China (PRC) has stolen classified
information on all of the United States' most advanced thermonuclear
warheads, and several of the associated reentry vehicles.
These thefts are the result of an intelligence collection program
spanning two decades, and continuing to the present. The PRC
intelligence collection program included espionage, review of
unclassified publications, and extensive interactions with scientists
from the Department of Energy's national weapons laboratories.

The stolen U.S. secrets have helped the PRC fabricate and
successfully test modern strategic thermonuclear weapons.
The stolen information includes classified information on seven
U.S. thermonuclear warheads, including every currently deployed
thermonuclear warhead in the U.S. intercontinental ballistic
missile arsenal. Together, these include the W-88 Trident D-5
thermonuclear warhead, and the W-56 Minuteman II, the W-62 Minuteman
III, the W-70 Lance, the W-76 Trident C-4, the W-78 Minuteman
III Mark 12A, and the W-87 Peacekeeper thermonuclear warheads.
The stolen information also includes classified design information
for an enhanced radiation weapon (commonly known as the "neutron
bomb"), which neither the United States, nor any other nation,
has ever deployed.

In addition, in the mid-1990s the PRC stole from a U.S.
national weapons laboratory classified U.S. thermonuclear weapons
information that cannot be identified in this unclassified
Report. Because this recent espionage case is currently under
investigation and involves sensitive intelligence sources and
methods, the Clinton administration has determined that further
information can not be made public without affecting national
security or ongoing criminal investigations.

The W-88 is a miniaturized, tapered thermonuclear warhead.
It is the United States' most sophisticated strategic thermonuclear
weapon. In the U.S. arsenal, the W-88 warhead is mated to
the D-5 submarine-launched ballistic missile carried aboard the
Trident nuclear submarine. The United States learned about the
theft of the W-88 Trident D-5 warhead information, as well as
about the theft of information regarding several other thermonuclear
weapons, in 1995.

On two occasions, the PRC has stolen classified U.S. information
about neutron bomb warheads from a U.S. national weapons laboratory.
The United States learned of these thefts of classified information
on the neutron bomb in 1996 and in the late 1970s, when the first
theft - including design information on the W-70 warhead - occurred.
The W-70 warhead contains elements that may be used either as
a strategic thermonuclear weapon, or as an enhanced radiation
weapon ("neutron bomb"). The PRC subsequently tested
the neutron bomb. The U.S. has never deployed a neutron weapon.

In addition, the Select Committee is aware of other PRC
thefts of U.S. thermonuclear weapons-related secrets. The
Clinton administration has determined that further information
about these thefts cannot be publicly disclosed without affecting
national security.

The Select Committee judges that the PRC will exploit elements
of the stolen U.S. design information for the development of
the PRC's new generation strategic thermonuclear warheads.
Current PRC silo-based missiles were designed for large, multi-megaton
thermonuclear warheads roughly equivalent to U.S. warheads of
the late 1950s. The PRC plans to supplement these silo-based
missiles with smaller, modern mobile missiles that require smaller
warheads. The PRC has three mobile ICBM programs currently underway
­ two road-mobile and one submarine launched program ­
all of which will be able to strike the United States.

The first of these new People's Liberation Army (PLA) mobile
ICBMs, the DF-31, may be tested in 1999 and could be deployed
as soon as 2002. The DF-31 ICBM and the PRC's other new generation
mobile ICBMs will require smaller, more compact warheads. The
stolen U.S. information on the W-70 or W-88 Trident D-5 will
be useful for this purpose.

The PRC has the infrastructure and technical ability to
use elements of the stolen U.S. warhead design information in
the PLA's next generation of thermonuclear weapons. If the
PRC attempted to deploy an exact replica of the U.S. W-88 Trident
D-5 warhead, it would face considerable technical challenges.
However, the PRC could build modern thermonuclear warheads based
on stolen U.S. design information, including the stolen W-88
design information, using processes similar to those developed
or available in a modern aerospace or precision guided munitions
industry. The Select Committee judges that the PRC has such infrastructure
and is capable of producing small thermonuclear warheads based
on the stolen U.S. design information, including the stolen W-88
information.

The Select Committee judges that the PRC is likely to continue
its work on advanced thermonuclear weapons based on the stolen
U.S. design information. The PRC could begin serial production
of advanced thermonuclear weapons based on stolen U.S. design
information during the next decade in connection with the development
of its new generation of intercontinental ballistic missiles.

The Select Committee judges that the PRC's acquisition
of U.S. classified information regarding thermonuclear warhead
designs from the Department of Energy's national weapons laboratories
saved the PRC years of effort and resources, and helped the
PRC in its efforts to fabricate and successfully test a new generation
of thermonuclear warheads. The PRC's access to, and use of, classified
U.S. information does not immediately alter the strategic balance
between the U.S. and PRC. Once the PRC's small, mobile strategic
ballistic missiles are deployed, however, they will be far more
difficult to locate than the PRC's current silo-based missiles.
This will make the PRC's strategic nuclear force more survivable.
Small, modern nuclear warheads also enable the PRC to deploy
multiple reentry vehicles (MRVs or MIRVs, multiple independently-targetable
reentry vehicles) on its ICBMs should it choose to do so.

The PRC's collection of intelligence on smaller U.S. thermonuclear
warheads began in the 1970s, when the PRC recognized its
weaknesses in physics and the deteriorating status of its nuclear
weapons programs. The Select Committee judges that the PRC's
intelligence collection efforts to develop modern thermonuclear
warheads are focused primarily on the U.S. Department of Energy's
National Laboratories at:

· Los Alamos

· Lawrence
Livermore

· Oak Ridge

· Sandia

The FBI has investigated a number of U.S. National Laboratory
employees in connection with suspected espionage.

The Select Committee judges that the U.S. national weapons
laboratories have been and are targeted by PRC espionage, and
almost certainly remain penetrated by the PRC today.

The United States did not become fully aware of the magnitude
of the counterintelligence problem at Department of Energy national
weapons laboratories until 1995. A series of PRC nuclear
weapons test explosions from 1992 to 1996 began a debate in the
U.S. Government about whether the PRC's designs for its new generation
of nuclear warheads were in fact based on stolen U.S. classified
information. The apparent purpose of these PRC tests was to develop
smaller, lighter thermonuclear warheads, with an increased yield-to-weight
ratio. In 1995, a "walk-in" approached the Central
Intelligence Agency outside the PRC and provided an official
PRC document classified "Secret" that contained specific
design information on the W-88 Trident D-5, and technical information
on other thermonuclear warheads. The CIA later determined that
the "walk-in" was directed by the PRC intelligence
services. Nonetheless, CIA and other Intelligence Community analysts
that reviewed the document concluded that it contained U.S. warhead
design information.

The National Security Advisor was briefed on PRC thefts
of classified U.S. thermonuclear warhead design information in
April 1996 (when he was the Deputy National Security Advisor),
and again in August 1997. In response to specific interrogatories
from the Select Committee, the National Security Advisor informed
the Select Committee that the President was not briefed about
the issue and the long-term counterintelligence problems at the
Department of Energy until early 1998. The Secretary of Energy
was briefed about the matter in late 1995 and early 1996. At
the writing of this report, the Secretary of Defense has been
briefed, but not the Secretaries of State and Commerce.

Congress was not provided adequate briefings on the extent
of the PRC's espionage program.

Under Presidential Decision Directive 61 issued in February
1998, the Department of Energy was required to implement improved
counterintelligence measures. In December 1998, the Department
of Energy began to implement a series of recommended improvements
to its counterintelligence program approved by Secretary Richardson
in November 1998. Based on testimony by the new head of the Department
of Energy's counterintelligence program, the unsuccessful history
of previous counterintelligence programs at the Department of
Energy, and other information that is not publicly available,
the Select Committee judges that the new counterintelligence
program at the Department of Energy will not be even minimally
effective until at least the year 2000.

Since the collapse of the Soviet Union, and continuing
today, Russia is cooperating with the PRC in numerous military
and civilian programs, including the PRC's civilian nuclear program.
The Select Committee is concerned about the possibility of cooperation
between Russia and the PRC on nuclear weapons. The Select Committee
judges that Russian nuclear weapons testing technology and experience
could significantly assist the PRC's nuclear weapons program,
including the PRC's exploitation of stolen U.S. thermonuclear
warhead design information. This is especially true if the PRC
complies with the Comprehensive Test Ban Treaty, which does not
permit the physical testing of nuclear weapons.

Chapter 2
Text

PRC
THEFT OF
U.S. THERMONUCLEAR
WARHEAD DESIGN
INFORMATION

he People's Republic of China's penetration of our national
weapons laboratories spans at least the past several decades,
and almost certainly continues today.

The PRC's nuclear weapons intelligence collection efforts
began after the end of the Cultural Revolution in 1976, when
the PRC assessed its weaknesses in physics and the deteriorating
status of its nuclear weapons programs.

The PRC's warhead designs of the late 1970s were large, multi-megaton
thermonuclear weapons that could only be carried on large ballistic
missiles and aircraft. The PRC's warheads were roughly equivalent
to U.S. warheads designed in the 1950s. The PRC may have decided
as early as that time to pursue more advanced thermonuclear warheads
for its new generation of ballistic missiles.

The PRC's twenty-year intelligence collection effort against
the U.S. has been aimed at this goal. The PRC employs a "mosaic"
approach that capitalizes on the collection of small bits of
information by a large number of individuals, which is then pieced
together in the PRC. This information is obtained through espionage,
rigorous review of U.S. unclassified technical and academic publications,
and extensive interaction with U.S. scientists and Department
of Energy laboratories.

The Select Committee judges that the PRC's intelligence collection
efforts to develop modern thermonuclear warheads are focused
primarily on the Los Alamos, Lawrence Livermore, Sandia, and
Oak Ridge National Laboratories.

As a result of these efforts, the PRC has stolen classified
U.S. thermonuclear design information that helped it fabricate
and successfully test a new generation of strategic warheads.

The PRC stole classified
information on every currently deployed U.S. intercontinental
ballistic missile (ICBM) and submarine-launched ballistic missile
(SLBM). The warheads for which the PRC stole classified information
include: the W-56 Minuteman II ICBM; the W-62 Minuteman III ICBM;
the W-70 Lance short-range ballistic missile (SRBM); the W-76
Trident C-4 SLBM; the W-78 Minuteman III Mark 12A ICBM; the W-87
Peacekeeper ICBM; and the W-88 Trident D-5 SLBM. The W-88 warhead
is the most sophisticated strategic nuclear warhead in the U.S.
arsenal. It is deployed on the Trident D-5 submarine-launched
missile.

In addition, in the mid-1990s the PRC stole from a U.S. national
weapons laboratory classified U.S. thermonuclear weapons information
that cannot be identified in this unclassified Report. Because
this recent espionage case is currently under investigation and
involves sensitive intelligence sources and methods, the Clinton
administration has determined that further information may not
be made public without affecting national security or ongoing
criminal investigations.

The PRC also stole classified information on U.S. weapons
design concepts, on weaponization features, and on warhead reentry
vehicles (the hardened shell that protects a warhead during reentry).

The PRC may have acquired detailed documents and blueprints
from the U.S. national weapons laboratories.

The U.S. Intelligence Community reported in 1996 that the
PRC stole neutron bomb technology from a U.S. national weapons
laboratory. The PRC had previously stolen design information
on the U.S. W-70 warhead in the late 1970s; that earlier theft,
which included design information, was discovered several months
after it took place. The W-70 has elements that can be used as
a strategic thermonuclear warhead or an enhanced radiation ("neutron
bomb") warhead. The PRC tested a neutron bomb in 1988.

The PRC may have also acquired classified U.S. nuclear weapons
computer codes from U.S. national weapons laboratories. The Select
Committee believes that nuclear weapons computer codes remain
a key target for PRC espionage. Nuclear weapons codes are important
for understanding the workings of nuclear weapons and can assist
in weapon design, maintenance, and adaptation. The PRC could
make use of this information, for example, to adapt stolen U.S.
thermonuclear design information to meet the PRC's particular
needs and capabilities.

During the mid-1990s, it was learned that the PRC had acquired
U.S. technical information about insensitive high explosives.
Insensitive high explosives are a component of certain thermonuclear
weapons. Insensitive high explosives are less energetic than
high explosives used in some other thermonuclear warheads, but
have advantages for other purposes, such as thermonuclear warheads
used on mobile missiles.

The PRC thefts from our national weapons laboratories began
at least as early as the late 1970s, and significant secrets
are known to have been stolen as recently as the mid-1990s. Such
thefts almost certainly continue to the present.

The Clinton administration has determined that additional
information about PRC thefts included in this section of the
Select Committee's Report cannot be publicly disclosed without
affecting national security.

The PRC's Next Generation Nuclear
Warheads

The PRC has acquired U.S. nuclear weapons design information
that could be utilized in developing the PRC's next generation
of modern thermonuclear warheads.

The Department of Energy identifies two general design paths
to the development of modern thermonuclear warheads:

· The first
path, which apparently has been followed by the Russians, emphasizes
simplicity and reliability in design

· The second
path, which the U.S. has taken, utilizes innovative designs and
lighter-weight warheads

The Select Committee judges that the combination of the PRC's
preference for U.S. designs, the PRC's theft of design information
on our most advanced thermonuclear warheads, and the PRC's demand
for small, modern warheads for its new generation of mobile intercontinental
ballistic missiles will result in the PRC emulating the U.S.
design path to develop its next generation of thermonuclear warheads.

The PRC has already
begun working on smaller thermonuclear warheads. During the
l990s, the PRC was working to complete testing of its modern
thermonuclear weapons before it signed the Comprehensive Test
Ban Treaty in 1996.1 The PRC conducted a series of nuclear tests
from 1992 to 1996. Based on what is known about PRC nuclear testing
practices, combined with data on PRC warhead yield and on PRC
missile development, it is clear that the purpose of the 1992
to 1996 test series was to develop small, light warheads for
the PRC's new nuclear forces.2

These tests led to suspicions in the U.S. Intelligence Community
that the PRC had stolen advanced U.S. thermonuclear warhead design
information. These suspicions were definitely confirmed by the
"walk-in" information received in 1995.

The Select Committee judges that the PRC is developing for
its next generation of road-mobile intercontinental ballistic
missiles smaller, more compact thermonuclear warheads that exploit
elements of stolen U.S. design information, including the stolen
design information from the U.S. W-70 Lance warhead or the W-88
Trident D-5 warhead.

The timeline on the next two-page spread shows an unclassified
history of the PRC's thermonuclear weapons development and its
acquisition of classified information from the United States.

Completing the development of its next-generation warhead
poses challenges for the PRC. The PRC may not currently be able
to match precisely the exact explosive power and other features
of U.S. weapons. Nonetheless, the PRC may be working toward this
goal, and the difficulties it faces are surmountable. Work-arounds
exist, using processes similar to those developed or available
in a modern aerospace or precision-guided munitions industry.
The PRC possesses these capabilities already.

The Impact of the PRC's Theft
of U.S. Thermonuclear Warhead Design Information

Mobile
and Submarine-Launched Missiles

The main application of the stolen U.S. thermonuclear warhead
information will likely be to the PRC's next-generation intercontinental
ballistic missiles.

The PRC is developing several new, solid-propellant, mobile
intercontinental ballistic missiles. These include both road-mobile
and submarine-launched intercontinental ballistic missiles.

Road-mobile ballistic missiles and submarine-launched ballistic
missiles require smaller, more advanced thermonuclear warheads.
The Select Committee judges it is likely that the PRC will use
a new, smaller thermonuclear warhead on its next generation road-mobile,
solid-propellant ICBM, the DF-31.

The DF-31 is likely to undergo its first test flight in 1999,
and could be deployed as early as 2002. Introduction of the PRC's
new, smaller thermonuclear warhead into PLA service could coincide
with the initial operational capability of the new road-mobile
DF-31 ballistic missile system.

The Select Committee judges that the PRC's thermonuclear warheads
will exploit elements of the U.S. W-70 Lance or W-88 Trident
D-5 warheads. While the PRC might not reproduce exact replicas
of these U.S. thermonuclear warheads, elements of the PRC's devices
could be similar.

Acceleration
of PRC Weapons Development

The PRC's theft of classified U.S. weapons design information
saved the PRC years of effort and resources in developing its
new generation of modern thermonuclear warheads. It provided
the PRC with access to design information that worked and was
within the PRC's ability to both develop and test. And it saved
the PRC from making mistakes or from pursuing blind alleys.

The loss of design information from the Department of Energy's
national weapons laboratories helped the PRC in its efforts to
fabricate and successfully test its next generation of nuclear
weapons designs. These warheads give the PRC small, modern thermonuclear
warheads roughly equivalent to current U.S. warhead yields.

Assessing the extent to which design information losses accelerated
the PRC's nuclear weapons development is complicated because
so much is unknown. The full extent of U.S. information that
the PRC acquired and the sophistication of the PRC's indigenous
design capabilities are unclear. Moreover, there is the possibility
of third country assistance to the PRC's nuclear weapons program,
which could also assist the PRC's exploitation of the stolen
U.S. nuclear weapons information. Nonetheless, it is patent that
the PRC has stolen significant classified U.S. design information
on our most modern thermonuclear warheads.

While it is sometimes
argued that eventually the PRC might have been able to produce
and test an advanced and modern thermonuclear weapon on its own,
the PRC had conducted only 45 nuclear tests in the more than
30 years from 1964 to 1996 (when the PRC signed the Comprehensive
Test Ban Treaty), which would have been insufficient for the
PRC to have developed advanced thermonuclear warheads on its
own. This compares to the approximately 1,030 tests by the United
States, 715 tests by the Soviet Union, and 210 by France.3

The following illustrates the evolution of smaller U.S. warheads.4

Effect
on PRC Nuclear Doctrine

Deploying new thermonuclear weapons provides the PRC with
additional doctrinal and operational options for its strategic
forces that, if exercised, would be troublesome for the United
States.

Smaller, more efficient thermonuclear warheads would provide
the PRC with the opportunity to develop and deploy a multiple
independently-targetable reentry vehicle (MIRV) should it decide
to do so. These smaller designs would allow the use of lighter
and faster reentry vehicles that may be better able to stress
and to overcome ballistic missile defenses.

The following two pages illustrate the development of smaller,
more efficient U.S. thermonuclear warheads, specifically the
W-87 Peacekeeper, a warhead for which the PRC stole classified
U.S. weapons information.

The PRC has expressed considerable opposition to U.S. deployment
of ballistic missile defenses.

Other advantages of increased warhead yield-to-weight ratios
include extended missile ranges and accuracy improvements. Smaller
warheads result in a more compact missile payload, extending
the range of ballistic missiles. This permits the use of smaller-diameter
sea-launched ballistic missiles and mobile missiles to strike
long-range targets. Longer range could enable PRC ballistic missile
submarines to strike the U.S. from within PRC waters, where they
can operate safely.

Multiple
Warhead Development

The deployment of multiple warheads on a single missile requires
smaller warheads that the PRC has not possessed.

The Select Committee has no information on whether the PRC
currently intends to develop and deploy multiple independently
targetable reentry vehicle systems. However, the Select Committee
is aware of reports that the PRC has undertaken efforts related
to multiple warhead technology.

Experts believe that the PRC currently has the technical capability
to develop and deploy silo-based ballistic missiles with multiple
reentry vehicles (MRVs) and multiple independently-targetable
reentry vehicles (MIRVs). Experts also agree that the PRC could
develop and deploy its new generation of mobile intercontinental
ballistic missiles with MRVs or MIRVs within a short period of
years after a decision to do so, and consistent with the presumed
timeframe for its planned deployment of its next-generation intercontinental
ballistic missiles.

Proliferation

The PRC is one of the world's leading proliferators of weapons
technologies. Concerns about the impact of the PRC's thefts of
U.S. thermonuclear warhead design information, therefore, include
the possible proliferation of the world's most sophisticated
nuclear weapons technology to nations hostile to the United States.

Russian
Assistance to the PRC's Nuclear Weapons Program

After the fall of the Soviet Union, the PRC and Russian scientists
became increasingly cooperative in civilian nuclear technology,
and apparently, military technology. The Select Committee is
concerned that the growing cooperation between Russia and the
PRC is an indication of current or future nuclear weapons cooperation.
The Select Committee judges that Russia's nuclear weapons testing
technology and experience could significantly assist the PRC
with its nuclear weapons program under the Comprehensive Test
Ban Treaty, which does not permit physical testing.

While the PRC could share its knowledge of U.S. advanced thermonuclear
warhead designs with Russia, Russia may not be interested in
deviating from its past developmental path, since existing Russian
warhead designs are apparently simple and reliable. The large
throw-weight of Russian ballistic missiles has given them less
cause for concern about the size and weight of their warheads.
Russia's nuclear stockpile maintenance requirements under a Comprehensive
Test Ban Treaty are thus very different than those of the United
States.

The prospect of PRC-Russian cooperation, if that were to include
military cooperation, would give rise to concerns in several
areas, including nuclear weapons development and nuclear stockpile
maintenance, nuclear weapons modeling and simulation, and nuclear
weapons testing data.

How the PRC Acquired Thermonuclear
Warhead
Design Inmformation from the United States:
PRC Espionage and Other PRC Techniques

The Select Committee judges that the PRC's intelligence collection
efforts to develop modern thermonuclear warheads have focused
primarily on the following U.S. National Laboratories: Los Alamos,
Lawrence Livermore, Oak Ridge, and Sandia. These efforts included
espionage, rigorous review of U.S. unclassified technical and
academic publications, and extensive interaction with U.S. scientists
and Department of Energy laboratories.

Espionage played
a central part in the PRC's acquisition of classified U.S. thermonuclear
warhead design secrets. In several cases, the PRC identified
lab employees, invited them to the PRC, and approached them for
help, sometimes playing upon ethnic ties to recruit individuals.

The PRC also rigorously mined unclassified technical information
and academic publications, including information from the National
Technical Information Center and other sources. PRC scientists
have even requested reports via e-mail from scientists at the
U.S. national weapons laboratories. Peter Lee, who had been a
scientist at both Lawrence Livermore and Los Alamos National
Laboratories and was convicted in 1997 of passing classified
information to the PRC, gave the PRC unclassified technical reports
upon request. The PRC also learned about conventional explosives
for nuclear weapon detonation from reviewing unclassified technical
reports published by Department of Energy national weapons laboratories.

PRC scientists have used their extensive laboratory-to-laboratory
interactions with the United States to gain information from
U.S. scientists on common problems, solutions to nuclear weapons
physics, and solutions to engineering problems. The PRC uses
elicitation in these meetings, where it shows familiarity with
U.S. information in an effort to "prime the pump" in
order to try to glean information about U.S. designs. U.S. scientists
have passed information to the PRC in this way that is of benefit
to the PRC's nuclear weapons program.

Specific examples of the loss of classified U.S. information
in this manner are detailed in the Select Committee's classified
Final Report. The Clinton administration has determined that
these examples cannot be publicly discussed without affecting
national security.

The PRC's espionage operations, which use traditional intelligence
gathering organizations as well as other entities, are aggressively
focused on U.S. weapons technology.

The PRC's Academy of Engineering Physics (CAEP), which is
under the Commission of Science, Technology, and Industry for
National Defense (COSTIND), is the entity in charge of the PRC's
nuclear weapons program. It is responsible for the research and
development, testing, and production of all of the PRC's nuclear
weapons. The figure on the following page shows the organization
of the PRC's nuclear infrastructure.5

The China Academy
of Engineering Physics has pursued a very close relationship
with U.S. national weapons laboratories, sending scientists as
well as senior management to Los Alamos and Lawrence Livermore.
Members of the China Academy of Engineering Physics senior management
have made at least two trips during the mid-to-late 1990s to
U.S. national weapons laboratories to acquire information and
collect intelligence. These visits provide the opportunity for
the PRC to collect intelligence. The presence of such PRC nationals
at the U.S. national weapons laboratories facilitates the PRC's
targeting of U.S. weapons scientists for the purpose of obtaining
nuclear weapons information.

U.S. and PRC lab-to-lab exchanges were ended in the late 1980s,
but were resumed in 1993. Scientific exchanges continue in many
areas including high-energy physics.6 Discussions at the U.S.
national weapons laboratories in connection with the foreign
visitors program are supposed to be strictly limited to technical
arms control and material accounting issues. Nonetheless, these
visits and scientific conferences provide opportunities for the
PRC to interact with U.S. scientists outside of official meetings,
and facilitate the PRC's targeting of U.S. weapons scientists.

The U.S. national weapons laboratories argue that there are
reciprocal gains from the exchanges. The Department of Energy
describes some of the insights gained from these exchanges as
unique. On the other hand, PRC scientists have misled the U.S.
about their objectives and technological developments. Despite
considerable debate in Congress and the Executive branch, including
several critical Government Accounting Office reports, the U.S.
Government has never made a definitive assessment of the risks
versus the benefits of scientific exchanges and foreign visitor
programs involving the U.S. national weapons laboratories.7

How the U.S. Government Learned
of the
PRC's Theft of Our Most Advanced
Thermonuclear Warhead Design Information

The U.S. Government did not become fully aware of the magnitude
of the counterintelligence problems at the Department of Energy
laboratories until 1995. The first indication of successful PRC
espionage against the laboratories arose in the late 1970s. During
the last several years, more information has become available
concerning thefts of U.S. thermonuclear warhead design information,
and how the PRC may be exploiting it. A series of PRC nuclear
tests conducted from 1992 to 1996 that furthered the PRC's development
of advanced warheads led to suspicions in the U.S. intelligence
community that the PRC had stolen advanced U.S. thermonuclear
warhead design information.

The
"Walk-In"

In 1995, a "walk-in" approached the Central Intelligence
Agency outside of the PRC and provided an official PRC document
classified "Secret" that contained design information
on the W-88 Trident D-5 warhead, the most modern in the U.S.
arsenal, as well as technical information concerning other thermonuclear
warheads.

The CIA later determined that the "walk-in" was
directed by the PRC intelligence services. Nonetheless, the CIA
and other Intelligence Community analysts that reviewed the document
concluded that it contained U.S. thermonuclear warhead design
information.

The "walk-in" document recognized that the U.S.
nuclear warheads represented the state-of-the-art against which
PRC thermonuclear warheads should be measured.

ESPIONAGE DEFINITION of a "WALK-IN"

A "walk-in" is an individual who voluntarily offers
to conduct espionage. The Encyclopedia of Espionage defines a
"walk-in" as "an unheralded defector or a dangle,
a 'walk-in' is a potential agent or a mole who literally walks
into an embassy or intelligence agency without prior contact
or recruitment." See the Spy Book, The Encyclopedia of Espionage,
by Norman Polmar and Thomas B. Allen (RH Reference & Information
Publishing, Random House).

The individual who approached the CIA in 1995 is suspected
of being a "directed walk-in": a "walk-in"
purposefully directed by the PRC to provide this information
to the United States. There is speculation as to the PRC's motives
for advertising to the United States the state of its nuclear
weapons development.

Over the following months, an assessment of the information
in the document was conducted by a multidisciplinary group from
the U.S. Government, including the Department of Energy and scientists
from the U.S. national weapons laboratories. The Department of
Energy and FBI investigations focused on the loss of the U.S.
W-88 Trident D-5 design information, but they did not focus on
the loss of technical information about the other five U.S. thermonuclear
warheads. A Department of Energy investigation of the loss of
technical information about the other five U.S. thermonuclear
warheads had not begun as of January 3, 1999, after the Select
Committee had completed its investigation. Also, the FBI had
not yet initiated an investigation as of January 3, 1999.

Since signing the Comprehensive Test Ban Treaty (CTBT) in
1996, the PRC has faced new challenges in maintaining its modern
thermonuclear warheads without physical testing. Indeed, even
after signing the CTBT, the PRC may be testing sub-critical or
low yield nuclear explosive devices underground at its Lop Nur
test site.

The PRC likely does not need additional physical tests for
its older thermonuclear warhead designs. But maintenance of the
nuclear weapons stockpile for these weapons does require testing.
The ban on physical testing to which the PRC agreed in 1996 has
therefore increased the PRC's interest in high performance computing
and access to sophisticated computer codes to simulate the explosion
of nuclear weapons.8

The Select Committee judges that the PRC has likely developed
only a very modest complement of codes from inputting its own
testing data into high performance computers. The PRC would,
therefore, be especially interested in acquiring U.S. thermonuclear
weapons codes for any new weapons based on elements of stolen
U.S. design information.

The Department of Energy reports that the PRC has in fact
acquired some U.S. computer codes, including: the MCNPT code;
the DOT3.5 code; and the NJOYC code.9 MCNPT is a theoretical
code that is useful in determining survivability of systems to
electronic penetration and dose penetration in humans. DOT3.5
is a two-dimensional empirical code that performs the same kinds
of calculations as MCNPT, except uses numerical integration.
NJOYC acts as a numerical translator between DOT3.5 and MCNPT.

Given the limited
number of nuclear tests that the PRC has conducted, the PRC likely
needs additional empirical information about advanced thermonuclear
weapon performance that it could obtain by stealing the U.S.
"legacy" computer codes, such as those that were
used by the Los Alamos National Laboratory to design the W-88
Trident D-5 warhead. The PRC may also need information about
dynamic three-dimensional data on warhead packaging, primary
and secondary coupling, and the chemical interactions of materials
inside the warhead over time.

The Select Committee is concerned that no procedures are in
place that would either prevent or detect the movement of classified
information, including classified nuclear-weapons design information
or computer codes, to unclassified sections of the computer systems
at U.S. national weapons laboratories. The access granted to
individuals from foreign countries, including students, to these
unclassified areas of the U.S. national weapons laboratories'
computer systems could make it possible for others acting as
agents of foreign countries to access such information, making
detection of the persons responsible for the theft even more
difficult.

The Select Committee believes that the PRC will continue to
target its collection efforts not only on Los Alamos National
Laboratory, but also on the other U.S. National Laboratories
involved with the U.S. nuclear stockpile maintenance program.

The PRC may also seek to improve its hydrostatic testing capabilities
by learning more about the Dual-Axis Radiographic Hydrotest (DARHT)
facility at Los Alamos.

U.S. Government Investigations
of Nuclear Weapons Design Information Losses

Investigation
of Theft of Design Information
for the Neutron Bomb

The Select Committee received information about the U.S. Government's
investigation of the PRC's theft of classified U.S. design information
for the W-70 thermonuclear warhead. The W-70, which is an enhanced
radiation nuclear warhead (or "neutron bomb"), also
has elements that can be used for a strategic thermonuclear warhead.
In 1996 the U.S. Intelligence Community reported that the PRC
had successfully stolen classified U.S. technology from a U.S.
Nuclear Weapons Laboratory about the neutron bomb.

This was not the first time the PRC had stolen classified
U.S. information about the neutron bomb. In the late 1970s, the
PRC stole design information on the U.S. W-70 warhead from Lawrence
Livermore Laboratory. The U.S. Government first learned of this
theft several months after it took place. The PRC subsequently
tested a neutron bomb in 1988.

The FBI developed a suspect in the earlier theft. The suspect
worked at Lawrence Livermore National Laboratory, and had access
to classified information including designs for a number of U.S.
thermonuclear weapons in the U.S. stockpile at that time.

In addition to design information about the W-70, this suspect
may have provided to the PRC additional classified information
about other U.S. weapons that could have significantly accelerated
the PRC's nuclear weapons program.

The Clinton administration has determined that further information
about these thefts cannot be publicly disclosed without affecting
national security or ongoing criminal investigations.

Investigation
of Thefts of Information Related to
the Detection of Submarines and of Laser Testing
of Miniature Nuclear Weapons Explosions

Peter Lee is a naturalized U.S. citizen who was born in Taiwan.
Lee worked at Los Alamos National Laboratory from 1984 to 1991,
and for TRW Inc., a contractor to Lawrence Livermore National
Laboratory, from 1973 to 1984 and again from 1991to 1997.10

Lee has admitted to the FBI that, in 1997, he passed to PRC
weapons scientists classified research into the detection of
enemy submarines under water. This research, if successfully
completed, could enable the PLA to threaten previously invulnerable
U.S. nuclear submarines.

Lee made the admissions in 1997 during six adversarial interviews
with the FBI. According to Lee, the illegal transfer of this
sensitive research occurred while he was employed by TRW, Inc.,
a contractor for the Lawrence Livermore National Laboratory.
The classified U.S.information was developed by Lawrence Livermore
as part of a joint United States-United Kingdom Radar Ocean Imaging
project for anti-submarine warfare applications.

Specifically, on or about May 11, 1997, Lee gave a lecture
in Beijing at the PRC Institute of Applied Physics and Computational
Mathematics (IAPCM). Among the attendees were nuclear weapons
scientists from the IAPCM and the China Academy of Engineering
Physics (CAEP).

Lee described for the PRC weapons scientists the physics of
microwave scattering from ocean waves. Lee specifically stated
that the purpose of the research was anti-submarine warfare.

At one point in his presentation, Lee displayed an image of
a surface ship wake, which he had brought with him from the United
States. He also drew a graph and explained the underlying physics
of his work and its applications. He told the PRC scientists
where to filter data within the graph to enhance the ability
to locate the ocean wake of a vessel.

Approximately two hours after his talk was over, Lee erased
the graph and tore the ship wake image "to shreds"
upon exiting the PRC institute.11

In 1997, the decision was made to not prosecute Lee for passing
this classified information on submarine detection to the PRC.
Because of the sensitivity of this area of research, the Defense
Department requested that this information not be used in a prosecution.

Throughout much of the l990s, the FBI conducted a multi-year
investigation of Peter Lee, employing a variety of techniques,
but without success in collecting incriminating evidence. Finally,
in 1997, Lee was charged with willfully providing to the PRC
classified information on techniques for creating miniature nuclear
fusion explosions.

Specifically, Lee explained to PRC weapons scientists how
deuterium and tritium can be loaded into a spherical capsule
called a target and surrounded by a "hohlraum," and
then heated by means of laser bombardment. The heat causes the
compression of these elements, creating a nuclear fusion micro-explosion.
This so-called "inertial confinement" technique permits
nuclear weapons scientists to study nuclear explosions in miniature
- something of especial usefulness to the PRC, which has agreed
to the ban on full-scale nuclear tests in the Comprehensive Test
Ban Treaty.

Lee's admission that he provided the PRC with this classified
information about nuclear testing using miniaturized fusion explosions
came in the course of the same 1997 adversarial FBI interviews
that yielded his admission of passing submarine detection research
to the PRC. Lee's delivery of the miniature nuclear testing information
to the PRC occurred in 1985, while he was employed as a researcher
at Los Alamos National Laboratory.

Lee said that during a lecture in the PRC he answered questions
and drew diagrams about hohlraum construction. In addition, Lee
is believed to have provided the PRC with information about inertial
confinement lasers that are used to replicate the coupling between
the primary and secondary in a thermonuclear weapon.

Lee was formally charged with one count of "gathering,
transmitting or losing defense information," in violation
of Section 793 of Title 18 of the U.S. Code, and one count of
providing false statements to a U.S. government agency, in violation
of Section 1001, Title 18. On December 8, 1997, Lee pled guilty
to willfully passing classified U.S. defense information to PRC
scientists during his 1985 visit to the PRC. Lee also pled guilty
to falsifying reports of contact with PRC nationals in 1997.

Lee was sentenced to 12 months in a halfway house, a $20,000
fine and 3,000 hours of community service.12

The Select Committee judges that, between 1985 and 1997, Lee
may have provided the PRC with more classified thermonuclear
weapons-related information than he has admitted.

The PRC apparently co-opted Lee by appealing to his ego, his
ethnicity, and his sense of self-importance as a scientist.

Investigation
of Theft of Design Information
For the W-88 Trident D-5 Thermonuclear Warhead

The Select Committee received information about the U.S. Government's
ongoing investigation of the loss of information about the W-88
Trident D-5 thermonuclear warhead design.

During the PRC's 1992 to 1996 series of advanced nuclear weapons
tests, a debate began in the U.S. Government about whether the
PRC had acquired classified U.S. thermonuclear weapons design
information. The Department of Energy began to investigate. In
1995, following the CIA's receipt of evidence (provided by the
PRC-directed "walk-in") that the PRC had acquired technical
information on a number of U.S. thermonuclear warheads, including
not only the W-88 Trident D-5 but five other warheads as well,
the Department of Energy's investigation intensified. That investigation,
however, focused on the W-88 and not the other weapons.

Early in its investigation, the Department of Energy cross-referenced
personnel who had worked on the design of the W-88 with those
who had traveled to the PRC or interacted with PRC scientists.
One individual who had hosted PRC visitors in the past emerged
from this inquiry as a suspect by the spring of 1995.

Even after being identified as a suspect, the individual,
who still had a security clearance, continued to work in one
of the most sensitive divisions at Los Alamos National Laboratory,
Division X, which handles thermonuclear weapons designs and computer
codes. In this position, the suspect requested and received permission
to hire a PRC graduate student who was studying in the U.S. for
the summer.

In December 1998, the suspect traveled to Taiwan. Following
his return from Taiwan in December 1998, he was removed from
Division X.

The FBI initiated a full investigation in the middle of 1996,
which remains ongoing. At the date of the Select Committee's
January 3, 1999 classified Final Report, the suspect continues
to work at the Los Alamos National Laboratory, and continues
to have access to classified information.

The FBI investigation of this suspect's possible involvement
in the theft of classified design information on the W-88 warhead
and other matters is ongoing.

The Clinton administration has determined that further information
on this matter cannot be disclosed publicly without affecting
national security or ongoing criminal investigations.

Investigation
of Additional Incidents

The Select Committee reviewed one case that offers a troublesome
example of the manner in which scientific exchanges in the PRC
can be exploited for espionage purposes. The incident involved
the inadvertent, bordering on negligent, disclosure of classified
technical information by a U.S. scientist lecturing in the PRC.

The U.S. scientist, who was representing a U.S. National Laboratory
during a lab-to-lab exchange with a PRC laboratory, was pressured
by PRC counterparts to provide a solution to a nuclear weapons-related
problem. Rather than decline, the scientist, who was aware of
the clear distinction between the classified and unclassified
technical information that was under discussion, provided an
analogy. The scientist immediately saw that the PRC scientists
had grasped the hint that was provided and realized that too
much had been said.

The PRC employs various approaches to co-opt U.S. scientists
to obtain classified information. These approaches include: appealing
to common ethnic heritage; arranging visits to ancestral homes
and relatives; paying for trips and travel in the PRC; flattering
the guest's knowledge and intelligence; holding elaborate banquets
to honor guests; and doggedly peppering U.S. scientists with
technical questions by experts, sometimes after a banquet at
which substantial amounts of alcohol have been consumed.

On average, the FBI has received about five security-related
referrals each month from the Department of Energy. Not all of
these concern the PRC. These referrals usually include possible
security violations and the inadvertent disclosure of classified
information.

The FBI normally conducts investigations of foreign individuals
working at the National Laboratories.

The Clinton administration has determined that additional
information in this section cannot be publicly disclosed without
affecting national security or ongoing criminal investigations.

The Department of Energy's Counterintelligence
Program at the U.S. National Weapons Laboratories

With additional funds provided by Congress in 1998, the Department
of Energy is attempting to reinvent its counterintelligence programs
at the U.S. national weapons laboratories to prevent continued
loss of information to the PRC's intelligence collection activities.

Funding for the Department of Energy's counterintelligence
program, including seven employees at the Department of Energy's
headquarters, was $7.6 million in Fiscal Year 1998. For Fiscal
Year 1999, Congress has increased that amount to $15.6 million.

With the support of the Director of Central Intelligence and
the Director of the Federal Bureau of Investigation, the President
issued Presidential Decision Directive 61 (PDD-61) in February
1998. PDD-61 requires that a senior FBI counterintelligence agent
be placed in charge of the Department of Energy's program, which
has been done.

PDD-61 also instructed that a counterintelligence report with
recommendations be presented to the Secretary of Energy. The
report was submitted to the Secretary on July 1, 1998, with 33
specific recommendations. The Secretary had 30 days to respond
to the National Security Council. However, due to the transition
from Secretary Pena to Secretary Richardson, the response was
delayed. In late November 1998, the Secretary of Energy approved
all substantive recommendations. In December 1998, the Directors
of the U.S. National Laboratories agreed to the counterintelligence
plan during a meeting with the Secretary of Energy. The Department
of Energy is now implementing the plan.

The Secretary's action plan instructs the Directors of the
U.S. National Laboratories to implement the recommendations.
It directs the Department of Energy's Office of Counterintelligence
to fund counterintelligence positions at individual laboratories
so that they work directly for the Department of Energy, not
the contractors that administer the laboratories.

The Department of Energy will create an audit trail to track
unclassified computer use and protect classified computer networks.
The action plan also directs the creation of counterintelligence
training programs and a counterintelligence analysis program.

The Department of Energy will also implement stricter requirements
for reporting all interactions with foreign individuals from
sensitive countries, including correspondence by e-mail. Laboratory
Directors will be responsible for scrutinizing foreign visitors,
in coordination with Department of Energy's Counterintelligence
Office.

The Department of Energy will require counterintelligence
polygraphs of those who work in special access programs (SAP)
and sensitive areas with knowledge of nuclear weapons design,
or actually have hands-on access to nuclear weapons (about 10
percent of the total cleared population within the Department
of Energy). Such persons will also undergo financial reviews
and more rigorous background investigations conducted through
local field offices of the FBI.

The FBI reportedly
has sent several agents to the Department of Energy in the last
10 years to try to improve the counterintelligence program, but
has repeatedly been unsuccessful. A significant problem has
been the lack of counterintelligence professionals, and a bureaucracy
that "buried" them and left them without access to
senior management or the Secretary of Energy. The Department
of Energy's new Counterintelligence Director now has direct access
to the Secretary.

After traveling to the laboratories and interviewing counterintelligence
officials, the Department of Energy's new Counterintelligence
Director reported in November 1998:

The counterintelligence program at DOE [the Department of
Energy] does not even meet minimal standards ... there is not
a counterintelligence [program], nor has there been one at DOE
[the Department of Energy] for many, many years.

The Department of Energy's counterintelligence program requires
additional training, funding, and accountability, according to
this counterintelligence official.

At present, the Department of Energy's background investigations
are conducted by an Office of Personnel Management contractor.
The new Director's opinion is that the present background investigations
are "totally inadequate" and "do [not] do us any
good whatsoever."

Another problem area is that the Department of Energy's counterintelligence
process presently does not have any mechanism for identifying
or reviewing the thousands of foreign visitors and workers at
the U.S. national weapons laboratories. On one occasion reviewed
by the Select Committee, for example, scientists from a U.S.
National Laboratory met foreign counterparts in a Holiday Inn
in Albuquerque, New Mexico, in order to circumvent their laboratory's
security procedures.

One responsibility of the Department of Energy's new counterintelligence
program will be to find out who visits the laboratories, including
those from sensitive countries, what they work on while they
visit, and whether their access is restricted to protect classified
information. Mechanisms have been recommended to identify visitors
and fully vet them. The Department of Energy will attempt to
improve the database used for background checks.

Classified information
has been placed on unclassified networks, with no system for
either detection or reliable prevention. There are no intrusion
detection devices to determine whether hackers have attacked
the Department of Energy's computer network. According to damage
assessments reviewed by the Select Committee, however, attacks
on the computers at the U.S. national weapons laboratories are
a serious problem. E-mail is also a threat: the U.S. national
weapons laboratories cannot track who is communicating with whom.
For example, over 250,000 unmonitored e-mails are sent out of
the Sandia National Laboratory alone each week.

In the year 2000, the Department of Energy will concentrate
on increasing its analytical and investigative capabilities.
Until at least the year 2000, the Department of Energy's counterintelligence
program will not be adequate.

The five U.S. National Laboratories (Lawrence Livermore, Los
Alamos, Oak Ridge, Sandia, and Pacific Northwest) are the primary
focus of the counterintelligence plan. The Department of Energy
is hiring senior counterintelligence experts who will report
directly to the Directors of these laboratories.

Many of the specific recommendations in the Presidential Decision
Directive are not new, and similar changes have been attempted
unsuccessfully before.

Notification of the President
and Senior U.S. Officials

In response to interrogatories
from the Select Committee, the National Security Advisor testified
in writing that the President did not learn about the issue of
successful PRC espionage at the U.S. national weapons laboratories
and long-term counterintelligence problems at the Department
of Energy until early 1998.13

The Department of Energy briefed the Secretary of Energy about
the matter in late 1995 and early 1996.

The Department of Energy first briefed the Deputy National
Security Advisor in April 1996.

The Department of Energy briefed the Director of Central Intelligence,
the Director of the FBI, the Secretary of Defense, and the Attorney
General during this period.

The Department of Energy has not briefed the Secretary of
State or the Secretary of Commerce. The Congress was not fully
briefed until late 1998, as a result of the efforts of the Select
Committee.

Chapter 2
Notes

1 The Select Committee believes that nuclear tests
related to the development of the PRC's next generation of thermonuclear
warheads may be continuing underground at the PRC test site at
Lop Nur.2 "Chinese Nuclear Testing and Warhead Development,"
Jonathan Medalia, Congressional Research Service, November 14,
1997.3 Ibid.4 Figure 3 - Size Comparison of U.S. Nuclear Warheads
Over Time, Lawrence Livermore National Laboratory, September
15, 1998.5 "Presentation on PRC, Nuclear Weapons and High
Performance Computing ," Lawrence Livermore National Laboratory,
September 15,1998.6 Premier Zhu Rongji recently praised the efforts and
progress of PRC and U.S. scientists who attended the 19th Meeting
of the Sino-U.S. Joint Committee on High Energy Physics. Reportedly,
Zhu expressed pleasure that the "two nations have conducted
wide-ranging in-depth exchanges during the meeting and put forward
many helpful proposals, which will not only be conducive to the
development of high energy physics in PRC and the U.S., but also
help expand scientific and technological cooperation between
the two countries." An area of concern is the PRC intelligence
practice of mining even ostensibly cooperative scientific exchanges
for useful information. "Premier Meets U.S. Science Group,"
China Daily, November 18, 1998.7 See Major Weaknesses in Foreign Visitor Controls at
Weapons Laboratories, Government Accounting Office, October 1988;
DOE Needs to Improve Controls Over Foreign Visitors to Weapons
Laboratories, Government Accounting Office, September 1997; and,
DOE Needs to Improve Controls Over Foreign Visitors To Its Weapons
Laboratories, Government Accounting Office, October 14, 1998.8 See Chapter 3, High Performance Computers, for additional
information about the PRC's interests in this area, and the linkage
between modern nuclear development and the importance of high
performance computing, especially for stockpile maintenance under
a Comprehensive Test Ban Treaty.9 "Presentation on PRC, Nuclear Weapons and High
Performance Computing ," Lawrence Livermore National Laboratory,
September 15, 1998.10 The Department of Energy conducted a damage assessment
of the Peter Lee losses that the Select Committee requested to
review but did not receive.11 Government's Response to Defendant's Position With
Respect to Sentencing Factors: Declarations of Jonathan Shapiro:
Attachments (U.S.D.C. C.D. Calif.) March 24, 199812 Letter from FBI Director Louis Freeh to Chairman Christopher
Cox and Ranking Member Norman Dicks, November 10, 1998. Peter
Lee refused to cooperate with the Select Committee's investigation
on the advice of his lawyer not to testify before, or provide
information to, the Select Committee.13 "Response to November 12 Letter Seeking Assistance
in Providing Briefings Concerning the President's Knowledge of
Several Subjects," Letter from Samuel Berger, Assistant
to the President for National Security Affairs to Chairman Christopher
Cox and Ranking Member Norman Dicks, December 22, 1998. Samuel
(Sandy) L. Berger, National Security Advisor, originally told
the Select Committee that he briefed President Clinton about
the theft of U.S. nuclear information in early 1998. Later, in
May 1999, as part of the declassification process to make this
report publicly available, Berger advised the Select Committee
that the President was briefed in July 1997, although no written
record of this meeting exists.